Ryanair Wins Second Challenge Against 3.4 Billion Euro Dutch Bailout

Ryanair secured another legal triumph as Europe's second top court ruled that EU competition regulators had failed to consider other beneficiaries within the Air France-KLM airline group. This decision comes after Ryanair had previously won a case against state aid granted by the Dutch government to Air France-KLM's Dutch unit.

Reuters reported that the Luxembourg-based General Court annulled the European Commission's revised 2021 decision approving the state aid, citing the exclusion of Air France-KLM holding and Air France as beneficiaries.

Examining the Links Within Air France-KLM Group

The General Court's ruling was based on analyzing the capital, organic, functional, and economic links between the companies in the Air France-KLM group. Furthermore, the contractual framework, type of aid measure, and context in which it was granted were also considered. The court concluded that Air France-KLM holding and Air France could indirectly benefit from the state aid.

Investing pointed out that following Ryanair's initial court victory, the European Commission re-evaluated the case and cleared the state aid, stating its necessity and proportionality. Unsatisfied with this decision, Ryanair returned its grievance to the General Court, leading to the recent annulment of the Commission's revised approval.

KLM's Response and Future Steps

The Dutch carrier KLM acknowledged the court ruling and said it would study the verdict before deciding on further actions. Notably, KLM had already repaid the loans related to the state aid in June 2022, with the credit facility ending in April 2023.

Ryanair's relentless pursuit of legal challenges against state aid provided to the pandemic-hit airline industry sets a precedent for other carriers. Governments across the European Union injected billions of euros into the struggling sector, which sparked Ryanair's series of lawsuits. The court's decision to annul the state aid approval could have broader implications for future aid packages within the aviation industry.

Calls for Clarity in State Aid Distribution

The ruling also highlights the need for clarity in defining the beneficiaries of state aid granted to airline groups. The judges criticized the European Commission for excluding Air France-KLM holding and Air France, emphasizing the interconnectedness of the companies within the group. This case serves as a reminder that comprehensive assessments should be conducted to ensure fair and transparent distribution of state aid.

The decision raises questions about striking the right balance between competition regulations and providing necessary support to struggling airlines. While state aid can offer financial relief during challenging times, it is crucial to consider potential distortions in the market. The court's ruling underlines the importance of thoroughly examining all relevant factors to ensure a level playing field for all carriers.

The annulment of the Dutch bailout for Air France-KLM's Dutch unit poses challenges for the subsidiary. The unit may face additional financial pressures and operational difficulties without the approved state aid.

This ruling could affect the unit's ability to recover from the pandemic's impact and navigate the ongoing challenges in the aviation industry.

Photo: Ryanair Newsroom